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acquisition Yageo given the go-ahead for KEMET acquisition following CIFUS review

Author / Editor: Luke James / Johanna Erbacher

The acquisition of KEMET, a Florida-based manufacturer of capacitors, by Yageo offers several advantages. For example, it will allow the company to expand its product offerings and geographic presence.

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KEMET Corporation's product portfolio includes inductors, AC film capacitors, sensors and actuators, relays, supercapacitors, varistors and aluminum electrolytic components.
KEMET Corporation's product portfolio includes inductors, AC film capacitors, sensors and actuators, relays, supercapacitors, varistors and aluminum electrolytic components.
(Source: gemeinfrei / Unsplash)

Announced on April 24 by KEMET, the Committee on Foreign Investment in the United States (CIFUS) notified both KEMET and Yageo on April 23 that it had completed its review of Yageo’s pending acquisition of KEMET and determined that there are no unresolved national security concerns with respect to the pending transaction.

Four days later, on April 28, KEMET made a further announcement, that the Anti-Monopoly Bureau of the State Administration for Market Regulation in China (SAMR) gave its unconditional approval of the pending acquisition of KEMET by Yageo under China’s Anti-Monopoly Law.

This means that Yageo Corporation has secured the blessings of both the United States’ and China’s relevant regulatory bodies for its acquisition of KEMET Corporation. Its product portfolio includes inductors, AC film capacitors, sensors and actuators, relays, supercapacitors, varistors, and aluminium electrolytic components.

The $1.8 billion acquisition of KEMET by Yageo indicates that the Taiwanese electronic component manufacturer is preparing to scale up its product offerings and geographical presence, enabling Yageo to broaden its sales to new regions and market segments such as automotive, 5G, robotics, and automation. Under the terms of the deal, Yageo will acquire all of KEMET’s outstanding shares at US$27.70 each. The merger will see the creation of a combined annual revenues of around the US$3 billion mark, with KEMET making up close to 50 percent of that figure—KEMET’s revenues stood at US$1.38 billion in the 12 months preceding September 2019.

When the acquisition was initially announced in November 2019, Yageo’s CEO Pierre Chen said in a press release that the deal would present an opportunity to combine the product offerings and geographic coverage of both Yageo and KEMET. “The integration will enhance our ability to serve customers in consumer electronics as well as in the high-end automotive, industrial, aerospace, telecom, and medical sectors,” Chen said. For Yageo, expansion into the U.S. market will be particularly valuable; U.S. sales account for only 6 percent of Yageo’s revenue compared to 20 percent in Europe and 48 percent in China. At the same time, the U.S. and the rest of the Americas are KEMET’s fastest growing market with a 30 percent year-on-year increase in regional revenue.

The merger is expected to be finalised in Q3 2020.

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